Definition of Macaulay duration

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1. Give the definition of Macaulay duration and explain when this will be equal to the maturity of a bond. What other types of duration are you aware of?

What does duration capture as a metric? Can we use the concept of duration for assets other than fixed income? Explain your reasoning within a short paragraph.

More generally, explain the process of immunizing a portfolio and mention what type of funds would normally engage in this technique.

What are the risks of immunizing a portfolio too often?

2. Explain within a small essay the usage of derivatives in a portfolio.

What would be the main reasons for using derivatives and what types of funds would normally engage in derivatives trading?

In general, explain what other technique other than derivatives a manager has in order to introduce leverage in a portfolio.

Reference no: EM133474988

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